Kingfisher plan to fly overseas under cloud

Kingfisher Airlines' plan to fly from Bangalore to San Francisco from April 2008 and thereafter to New York would be in jeopardy if there is no change in government policy on overseas flights by airlines.

Kingfisher Airlines Chairman Vijay Mallya has said that he would use the rights of Air Deccan to fly overseas. But that may be easier said than done.

Under existing government policy, only airlines that have been flying domestically for more than five years are eligible to fly overseas.

"There is no provision to allow one carrier to use the other's rights if one just has a stake in the other," says a senior aviation ministry official. Only if an airline is fully bought over or merged can the rights be used interchangeably. The policy is that "traffic rights on international routes allotted to an airline being taken over will be transferred subject to its actual use."

It is important to note that the A340-500 aircraft that Kingfisher plans to use for the overseas flights, with 36 first class and 204 Kingfisher class seats, will be Kingfisher aircraft.

Moreover, the service that Kingfisher intends to provide is intrinsically linked to its brand and will be a premium business class product, with possibly a "chef-on-board", quite in contrast to what Air Deccan might offer as and when it does fly overseas. Mallya is leaving nothing to chance as far as this goes and is looking to offer something that's "better than the best".

Says an Air Deccan official, "There are no low cost carriers doing long haul routes. If Deccan does fly overseas, it would be primarily on routes in southeast Asia and West Asia. Deccan doesn't have any, or has not ordered any aircraft to do the Europe and US routes."

Plans to fly overseas are being made with only the Kingfisher Airlines in mind. A Kingfisher Airlines team recently visited Belgium to get its "inflight product right".

Mallya has directed that the products - crockery, cutlery, kits, duvets, sleeper suits - must be top-notch and the airline has already spent a considerable amount in the run-up to its international launch.

"We can always lease out our aircraft, if permission doesn't come through. But a considerable amount of management attention and money has already been spent on preparations," said a source with Kingfisher Airlines.

Mallya's takeover of Air Deccan has also run into a temporary snag, as security clearances are required for Mallya, Hitesh Patel (CEO of KFA, who is a US citizen) and Ravi Nendungadi (president and CFO of UB Group) before they are appointed on the board of Air Deccan.

"The home ministry will have to give the security clearance for the appointees to the board. These clearances have been asked for, quite late. In the case of Hitesh Patel, clearance could take quite long," according to a source associated with the process.

Even after the open offer is completed, it could be a while before the board can be changed to incorporate the UB nominees.